Law firms are facing thousands of claims for professional negligence over their involvement in ‘right to buy’ work, it has emerged.
Last week the judiciary issued a new right-to-buy practice direction, which came into immediate effect, to deal with the potential deluge of cases.
Under this, all right-to-buy cases are being transferred to the central registry of the Chancery Division and assigned to the chief master, whereupon they are being stayed. Mr Justice Sayles has been designated as the judge handling case management and trials that result; the latest case management conference is scheduled for next week.
Manchester law firm Tandem Law – which alone has around 6,000 cases on its books – is named in the practice direction as being responsible for maintaining a list of all claims.
The right-to-buy scheme enabled council or housing association tenants who had lived in their property for more than five years the right to buy the property at a discounted price.
It is claimed that as more and more people began to take advantage of the right to buy their home, intermediaries saw an opportunity to make money by charging excessive fees for arranging mortgages.
These claims against the mortgage broker and/or solicitor will be for relatively small sums of a few thousand pounds. The larger claims against solicitors accuse them of failing to advise clients properly, both in terms of conveyancing and mortgage issues, with the close relationship between some mortgage providers and solicitors under particular scrutiny.
The claimant and defendant lawyers – who drafted the practice direction for approval – are in the process of selecting around 20 test cases between them that span the main issues raised by the litigation. A resolution is not expected until late 2014/early 2015.
Earlier this year the Solicitors Regulation Authority said that as a problem facing conveyancing solicitors, with claims being brought on the basis that solicitors failed to advise properly on matters such as agency fees, payment protection insurance and alternative funding options being available.
“We are engaging with firms who originally acted for the current litigants and also with those firms currently representing the litigants,” it said.